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05 November 2014

Restrictive covenants

2 mins

Recent cases revisit the operation of restrictive covenants looking at enforceability and implications for garden leave.

The Court of Appeal has confirmed recently in Prophet plc v Huggett [2014] EWCA Civ 1013 that it is not the court’s job to rewrite poorly drafted restrictive covenants to bring them in line with common sense.  Where the covenant is ambiguous amendments can potentially be made. If however it is clearly drafted but the wording as it is doesn’t cover all that the covenant was intended to cover, it is not the court’s job to step in.

The High Court has also recently dealt with questions regarding the use and scope of restrictive covenants in conjunction with notice periods. In Sunrise Brokers LLP v Michael Rodgers [2014] EWHC 2633 (QB), the High Court held that an employee has no right to force the conversion of their notice period into a garden leave period, this has to be the employers choice. Furthermore, if the employee in this situation chooses not to work, this decision indicates that the employer is within their rights to choose not to pay their salary. The employer will not commit a fundamental breach of contract as it is the employee who has decided not to work. Therefore, so long as the restrictive covenants within the contract are suitably drafted and enforceable, the employer will still be able to rely on them.

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